Tesla has a history of having high executive turnover, could the company’s head of AI be the next to jump ship?
If history is any indication, Tesla (TSLA) – Get Tesla Inc Report could be looking for a new C-suite officer soon.
Besides electric vehicles, Tesla is known for executive turnover.
In 2019, AllianceBernstein put out a report stating that the company has had an annualized turnover rate of 44% for executives that report to Musk.
To put that into perspective, companies like Facebook (FB) – Get Meta Platforms Inc. Class A Report, Amazon (AMZN) – Get Amazon.com, Inc. Report, Uber (UBER) – Get Uber Technologies, Inc. Report, Lyft (LYFT) – Get Lyft, Inc. Class A Report, Netflix (NFLX) – Get Netflix, Inc. Report, Airbnb (ABNB) – Get Airbnb, Inc. Class A Report and Snap Inc. (SNAP) – Get Snap, Inc. Class A Report had an average annualized turnover rate of just 9%.
The report also stated that Tesla CEO Elon Musk tended to have more executives reporting to him.
Musk averaged between 17 to 18 executives during the reporting period, compared to the CEOs of other companies who had between nine and 12.
“While one could argue that [Tesla’s] high turnover reflects its unique and demanding culture, we worry that such turnover not only causes instability … but could also reflect more significant concerns among senior leaders about the company’s direction or workplace practices,” Bernstein analyst Toni Sacconaghi said.
The problem is so pronounced that Tesla short sellers have a Dropbox file counting the executive exits from the company.
Could Tesla’s AI Chief Be Next?
All that background leads us to news Monday that Tesla head of AI, Adrej Karpathy, will be taking a four-month sabbatical.
On Sunday, Musk dropped a tweet announcing the sabbatical. The public reaction to the news resulted in Adrej explaining what he will be doing with his time.
For people who have been following the saga, in the past executives who have taken long sabbaticals from Tesla have ended up never coming back.
Doug Field, Tesla’s former senior vice president of engineering, took a leave of absence back in 2018.
The company said the Field would be back, but a few months later it was revealed that Field would not be returning and instead jumped ship to Apple (AAPL) – Get Apple Inc. Report.
The fact that the two colleagues are responding to each other in public on social media may mean that Karpathy is coming back.
But based on recent history, that sabbatical could be the beginning of his end at the company.
Tesla AI Is Pivotal for Growth
Tesla has placed a lot on the shoulders of its artificial intelligence and autopilot division.
The electric vehicle maker dominates the current EV market landscape but there are competitors with the capital and name recognition ready to give the upstart company a run for its money.
Tesla will have to rely on its tech to differentiate itself from these competitors and the company has invested heavily in one particular piece of tech over the past few years: Autopilot.
The company’s self-driving technology is seen as one of the auto industry’s most sophisticated, but it has also seen increasing scrutiny in recent years.
Last month, Democratic Senators Richard Blumenthal and Ed Markey sent a letter to Tesla CEO Elon Musk raising “significant concerns” about the company’s Autopilot and FSD (full self-driving) systems, according to Reuters.
The price of FSD (full self driving, a more advanced system compared to Autopilot) is rising in the U.S.
